India's Jio attracts $1B investment in its fiber assets

Major investors have already piled into Europe's market for telecom infrastructure. Now they are targeting India.

The Abu Dhabi Investment Authority (ADIA), one of the biggest shareholders in Spanish towers company Cellnex, and Saudi Arabia's Public Investment Fund (PIF) are pumping more than $1 billion into Jio Digital Fiber, a holding company for the fiber network of Reliance Jio, India's biggest operator.

The funds will each make an investment of 37.79 billion Indian rupees ($506 million) in Jio Digital Fiber, which owns nearly 17.37 million kilometers of fiber across India as well as Jio's towers.

Spinning off these assets has removed them from Jio's balance sheet and helped it to attract funding. Jio's goal is to raise around $5.4 billion through stakes sale and debt for the digital fiber business.

Those funds are designed to support Jio's push into the broadband sector. And its aggressive plans for a fiber deployment should, in turn, put pressure other Indian telcos.

Right now, India has one of the world's lowest rates of fiber deployment. It is a concern given that forthcoming 5G mobile networks may need fiber for "backhaul," the connection between basestations and the core network. Today, just 25% of sites are "fiberized."

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Mukesh Ambani, the head of parent company Reliance Industries, wants his fiber service to reach about 50 million Indian households. While he has not provided a timeline for that rollout, India currently has only 20 million wireline broadband subscribers, according to the latest regulatory data, with Jio active in around 2,000 cities.

But a recent lockdown to prevent the spread of the COVID-19 pandemic has fueled a surge in the number of home broadband connections. Operators are responding with a renewed focus on the home broadband segment. Healthier margins and greater customer loyalty than in mobile could make it a more lucrative opportunity.

Strong competition for Jio will come from arch-rival Bharti Airtel. It plans to provide a full-fiber service to around 40 million households in more than 1,000 cities in the next 12 to 18 months, according to media reports. Recently, Airtel announced a tie-up with local cable operators to provide last-mile connectivity. A heated broadband battle between Airtel and Jio could lie ahead.

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— Gagandeep Kaur, contributing editor, special to Light Reading